News

Shirakawa accepts money from Silicon Valley college at center of scandal

By Karen de Sá kdesa@mercurynews.com

Posted:
02/22/2013 12:01:00 AM PST

Updated:
02/22/2013 07:02:32 AM PST

A private college in Silicon Valley whose CEO faces federal charges of illegally assisting foreign students enrolled at its campus has shown a pattern of reaching out to California politicians -- passing out thousands of dollars, and in some cases requesting favors.

But while a bevy of state and congressional leaders boosted their campaign funds with contributions from administrators of Sunnyvale's Herguan University, embattled Santa Clara County Supervisor George Shirakawa Jr. did something different: He reported school officials paid him between $1,000 and $10,000 as a consulting fee -- then refused to discuss it further. And shortly after a reporter from this newspaper contacted the university, one Herguan administrator dashed off an internal email that appears to show the money was intended as a political donation, but the veteran politician instead pocketed it as income.

"You need to be careful," Herguan Vice President Richard Friberg warned school officers on Dec. 6 after a reporter's call. "George Shirakawa is in more trouble."

Friberg's email was sent to indicted CEO Jerry Wang; his father and president, Ying Qiu Wang; and his mother, Chief Financial Officer Su Tong. The subject line stated: "Daisy and George." (Daisy Chu, who is married to San Jose Councilman Kansen Chu, is a Shirakawa county staff member.)

The email continues: "The newspaper called today wanting to know what George is consulting on at HGU. Daisy maybe taking your money and NOT putting it to Political Donations to avoid the other problems George has with the county and State. She maybe saying it is for 'consulting' so it does not have to be reported on the political reporting forms, but just the tax forms. As an elected official, George still has to list his income sources!"

Advertisement

The email raises the prospect that Shirakawa may have run afoul of the state penal code and election laws governing campaign contributions, gifts and outside employment. A misrepresentation on forms submitted to the state -- signed under penalty of perjury -- could add to the supervisor's woes. Shirakawa is already under scrutiny by the county District Attorney's Office and the state Fair Political Practices Commission for expense account abuses and failure to file campaign statements.

According to reports he filed last year, Shirakawa received an unspecified amount between $1,000 and $10,000 from Herguan for "Consultant Services" performed between January and December 2011. The services overlapped with an 18-month period that the Department of Homeland Security was secretly investigating the university, a fact known publicly only after a federal search of Herguan's offices last year.

Shirakawa's Form 700, an economic interest report he must file each year, does not detail his work. When this newspaper asked Shirakawa to produce his contract with Herguan, and to describe precisely what he did for the troubled university and for how long, the supervisor and Daisy Chu rebuffed the inquiries.

Shirakawa offered only: "I had nothing to do with that investigation."

But the email suggests the supervisor may have taken what Herguan considered to be a political contribution, and instead used it as personal income. Three legal experts familiar with Shirakawa's case who reviewed the email on the condition of anonymity agreed the message clearly indicated Shirakawa did no work for Herguan, and that he misrepresented the income reported to the state.

Violations of that type can result in charges of perjury, a felony, and the crime of submitting false documents to the state.

If the money from Herguan was a gift instead of a campaign contribution, then the amount -- even at its lowest reported value of $1,000 -- far exceeds the $420 statewide limit for elected officials. Exceeding that limit can trigger a $5,000 fine, plus the amount of the gift.

If someone makes a campaign contribution, "then it has to be reported as a contribution," said Gary Winuk, chief enforcement officer for the Fair Political Practices Commission. Speaking generally and not about Shirakawa's case, Winuk added: "If you received income, it has to have been from work provided, otherwise it's a gift and needs to be reported as a gift."

In his email, Herguan's Friberg fretted about associating with Shirakawa, stating that the university should avoid "any more bad publicity. It also just makes Jerry's case look bad because it looks like the school and Jerry are associated with corrupt people."

While Shirakawa is being investigated, he is not the subject of any criminal charges. The email nonetheless urged university officials to instead seek out other politicians: "Doing anything that ties you or the schools to Shirakawa will sink the ship!" he wrote. "Get Daisy to focus on someone else like Paul Fong or Mike Honda or even her husband Kansen."

The email was forwarded anonymously to this newspaper, after questions to school officials about its financial dealing with Shirakawa. Herguan administrators, including Friberg, declined to discuss the matter. CFO Tong, who was shown a printed copy, refused to comment other than to vigorously question who had forwarded the email.

Like Shirakawa, Herguan has reason to be concerned about more scrutiny. According to Immigration and Customs Enforcement officials, the school's ability to enroll foreign students is now in jeopardy, after the August arrest of its CEO. Wang is charged with aggravated identity theft, filing false documents and unauthorized access to a government computer from 2007 to 2011, and faces up to 23 years in prison and more than $1 million in fines.

Wang is charged with illegally assisting the school's mostly Asian students to the campus off Lawrence Expressway, where they would pay thousands of dollars in tuition for academic credits and degrees that accredited universities refuse to recognize. A 2011 investigation by this newspaper showed Herguan misrepresented information on federal applications, which allowed it to sponsor overseas students for coveted visas.

Wang entered a not-guilty plea in U.S. District Court and is free on bond awaiting trial.

There is evidence that Herguan officials have tried multiple routes to woo public officials, donating individually although their connection to Herguan was not always noted on campaign forms. As recently as September, contributions went to state lawmakers Jim Beall, D-San Jose, and Paul Fong, D-Mountain View, as well as congressional Democrats Mike Honda, Zoe Lofgren, and Judy Chu, of Pasadena.

Herguan sought both money and assistance:

On Aug. 20, 2012, 18 days after Wang's arrest, congresswoman Chu's office received a call from a Herguan employee requesting "fair treatment" in his case, to which Chu declined to respond. Ying Wang gave Chu's campaign $250 in 2011 and $250 in 2012.

Beall received $2,750 in contributions last year, the same year he spoke at the school's graduation. His office was also asked to help with a labor dispute, but declined.

Fong received $3,000 in 2011, when he addressed the Herguan graduating class. In 2012, Fong attended a news conference and presented a certificate at the opening of a new school building. Fong's office reports it also "assisted the university to establish contact with the Bureau of Private Postsecondary Education" related to an audit of the school.

When asked about their connections with the university, the politicians distanced themselves. Lofgren and Judy Chu both emphasized they have pushed for legislation banning what Lofgren calls "fly-by-night U's." Upon learning from a reporter this month that she had received two $1,000 donations from Herguan administrators not identified on her campaign forms with the university's name, Lofgren immediately returned the money.

Shirakawa has previously filed disclosures detailing consulting income. In Form 700s he filed in 2008 when he was running for supervisor, he reported receiving tens of thousands of dollars from consulting contracts with developers, political strategists and a Monterey Road nightclub. But those disclosures involved clients during a two-year period when he worked as a lobbyist after leaving the San Jose City Council -- before becoming a full-time supervisor.

Judy Nadler, a former mayor and government ethics expert at Santa Clara University, said even if Shirakawa worked for Herguan, it raises questions.

"There are two reasons you hire consultants, one is because they have expertise and you hire them to get their skills or information; the other reason is you want a person with the ability to open doors." Given the expanding probe into Shirakawa's abuse of public office, Nadler added: "The more questions that come up about his various activities, the more troubling it is. That's why the public trust is at stake here."